Cheniere Energy Partners Reports Third Quarter 2013 Results

Cheniere Energy Partners Reports Third Quarter 2013 Results
PR Newswire
HOUSTON, Nov. 8, 2013
HOUSTON, Nov. 8,2013 /PRNewswire/ --Cheniere Energy Partners, L.P.
("Cheniere Partners") (NYSE MKT: CQP) reported a net loss of $98.1 million and
$196.9 million for the three and nine months ended September 30, 2013,
respectively, compared to a net loss of $51.4 million and $106.8 million for
the same periods in 2012, respectively.
Significant items for the three months and nine months ended September 30,
2013 were $23.8 million and $34.2 million, respectively, compared to $4.0
million and $38.0 million, respectively, for the comparable 2012 periods.
Significant items for the quarter related to development expenses and
derivative gains/losses, and for the nine months ended September 30, 2013,
significant items also included loss on early extinguishment of debt.
Development expenses were primarily for the liquefaction facilities we are
developing through Sabine Pass Liquefaction, LLC ("Sabine Pass Liquefaction")
at the Sabine Pass LNG terminal adjacent to the existing regasification
facilities (the "Liquefaction Project"). Derivative gains/losses were
primarily the result of the change in fair value of Sabine Pass Liquefaction's
interest rate derivatives to hedge the exposure to volatility in a portion of
the floating-rate interest payments under the four credit facilities. Loss on
early extinguishment of debt was related to Sabine Pass Liquefaction amending
and replacing its $3.6 billion credit facility with four credit facilities
aggregating $5.9 billion.
Liquefaction Project Update
We continue to make progress on the Liquefaction Project, which is being
developed for up to six natural gas liquefaction trains ("Trains"), each with
a design production of approximately 4.5 mtpa. We have received Federal
Energy Regulatory Commission ("FERC") and Department of Energy ("DOE")
approvals for Trains 1 through 4, and we have filed all required regulatory
applications with the FERC and DOE to develop Trains 5 and 6.
The Trains are in various stages of development.
oConstruction on Trains 1 and 2 began in August 2012, and as of September
30, 2013, the overall project for Trains 1 and 2 was approximately 45%
complete, which is ahead of the contracted schedule. Based on our current
construction, we anticipate that Train 1 will produce LNG by late 2015.
oConstruction on Trains 3 and 4 began in May 2013, and as of September 30,
2013, the overall project for Trains 3 and 4 was approximately 10%
complete. To date, soil stabilization has been completed and pile
driving, our next critical path item, is underway. We expect Trains 3 and
4 to become operational in late 2016 and 2017, respectively.
oWe continue to make progress with the commercialization and development of
Trains 5 and 6. To date, we have completed two LNG sale and purchase
agreements ("SPAs") for approximately 3.75 mtpa, in aggregate, of LNG
volumes that commence with the start of Train 5 operations. Annual fixed
fee revenues associated with these SPAs are approximately $0.6 billion.
Bechtel has begun the front-end engineering design ("FEED") on Trains 5
and 6, and we have commenced the regulatory approval process. In
September 2013, we filed the complete application with the FERC. In
February 2013 and in April 2013, we filed Free Trade Agreement ("FTA") and
non-FTA export applications for LNG volumes under the SPAs with Total Gas
& Power North America, Inc. ("Total") and Centrica plc ("Centrica"),
respectively. In September 2013, we filed FTA and non-FTA export
applications for LNG volumes for the un-contracted volumes from Train 5
and for all volumes from Train 6. To date, we have received authorization
from the DOE to export LNG volumes to FTA countries under the Total SPA
and Centrica SPA. FTA authorization for the remaining volumes from Train
5 and all volumes from Train 6 as well as non-FTA authorizations for both
Trains 5 and 6 are pending.
Liquefaction Project Timeline
Target Date
Trains Trains Trains
Milestone
1 & 2 3 & 4 5 & 6
T5: Received
DOE export authorization Received Received FTA
Pending Non-FTA
Definitive commercial Completed 7.7 Completed 8.3 T5: Completed
agreements mtpa mtpa
T6: 2014
- BG Gulf Coast LNG, LLC 4.2 mtpa 1.3 mtpa
- Gas Natural Fenosa 3.5 mtpa
- KOGAS 3.5 mtpa
- GAIL (India) Ltd. 3.5 mtpa
- Total Gas & Power N.A. 2.0 mtpa
- Centrica plc 1.75 mtpa
EPC contract Completed Completed 2015
Financing 2015
- Equity Completed Completed
- Debt commitments Received Received
FERC authorization
- FERC Order Received Received 2,015
- Certificate to commence Received Received
construction
Issue Notice to Proceed Completed Completed 2,015
Commence operations 2015/2016 2016/2017 2018/2019
Q3 2013 Results
For the quarter and nine months ended September 30, 2013, Cheniere Partners
reported loss from operations of $23.4 million and $38.1 million,
respectively, compared to loss of $8.2 million and income of $23.7 million for
the respective comparable periods in 2012. Net operating losses were
primarily affected by operating and maintenance expenses and general and
administrative expenses. Increases in operating and maintenance expenses of
$15.8 million and $41.7 million for the three and nine months ended September
30, 2013, respectively, compared to the comparable 2012 periods resulted
primarily from costs incurred to purchase LNG to maintain the cryogenic
readiness of the regasification facilities at the Sabine Pass LNG terminal and
for the nine months ended September 30, 2013, included increases in variable
compensation expenses. Increases in general and administrative expenses of
$3.3 million and $52.5 million for the three and nine months ended September
30, 2013, respectively, compared to the comparable 2012 periods were primarily
due to increased costs incurred to manage the construction of Trains 1 through
4, which resulted from a management services agreement entered into by Sabine
Pass Liquefaction, in which Sabine Pass Liquefaction is required to pay a
wholly owned subsidiary of Cheniere Energy, Inc. ("Cheniere Energy") a monthly
fee based upon the capital expenditures incurred in the previous month for the
Liquefaction Project. For the three and nine months ended September 30, 2013,
the costs incurred to manage the construction of Trains 1 through 4 were $35.2
million and $72.9 million, respectively. These payments are being funded from
proceeds received from the Liquefaction Project's equity and debt financings.
2013 Distributions
We estimate that the annualized distribution to common unitholders for fiscal
year 2013 will be $1.70 per unit. We will pay a cash distribution per common
unit of $0.425 to unitholders of record as of November 1, 2013, and the
related general partner distribution on November 14, 2013.
Cheniere Partners owns 100 percent of the Sabine Pass LNG terminal located on
the Sabine Pass deep water shipping channel less than four miles from the Gulf
Coast. The Sabine Pass LNG terminal has regasification facilities that
include existing infrastructure of five LNG storage tanks with capacity of
approximately 16.9 billion cubic feet equivalent (Bcfe), two docks that can
accommodate vessels with capacity of up to 265,000 cubic meters and vaporizers
with regasification capacity of approximately 4.0 Bcf/d. Cheniere Partners is
developing natural gas liquefaction facilities at the Sabine Pass LNG terminal
adjacent to the existing regasification facilities (the "Liquefaction
Project"). Cheniere Partners plans to construct over time up to six natural
gas liquefaction trains ("Trains"), which are in various stages of
development. Each Train is expected to have a design production capacity of
approximately 4.5 mtpa. Cheniere Partners' wholly owned subsidiary, Sabine
Pass Liquefaction, LLC ("Sabine Pass Liquefaction"), has entered into lump sum
turnkey contracts for the engineering, procurement and construction of Train
1, Train 2, Train 3 and Train 4 with Bechtel Oil, Gas and Chemicals, Inc.
("Bechtel"). Sabine Pass Liquefaction has commenced construction of Train 1
and Train 2 and the related new facilities needed to treat, liquefy, store and
export natural gas. Construction of Train 3 and Train 4 and the related
facilities commenced in May 2013. Sabine Pass Liquefaction recently began the
development of Train 5 and Train 6 and commenced the regulatory process in
February 2013. Sabine Pass Liquefaction has also entered into six third-party
LNG sale and purchase agreements ("SPAs"). The customers include BG Gulf Coast
LNG, LLC ("BG") for 5.5 mtpa, Gas Natural Aprovisionamientos SDG S.A. ("Gas
Natural Fenosa") for 3.5 mtpa, Korea Gas Corporation ("KOGAS") for 3.5 mtpa,
GAIL (India) Ltd. ("GAIL") for 3.5 mtpa, Total Gas & Power North America, Inc.
("Total") for 2.0 mtpa and Centrica plc ("Centrica") for 1.75 mtpa. In
addition, Sabine Pass Liquefaction has entered into an SPA with Cheniere
Marketing, LLC ("Cheniere Marketing") for up to 2.0 mtpa of LNG that is
produced but not already committed to third parties. The BG and Cheniere
Marketing SPAs commence with the start of Train 1 operations and the Gas
Natural Fenosa SPA commences with the start of Train 2 operations. The KOGAS
and GAIL SPAs commence with the start of Train 3 and Train 4 operations,
respectively, and the Total and Centrica SPAs commence with the start of Train
5 operations. Cheniere Partners has placed documentation pertaining to the
Liquefaction Project, including the applications and supporting studies, on
its website located at http://www.cheniereenergypartners.com.
For additional information, please refer to the Cheniere Energy Partners, L.P.
website at www.cheniereenergypartners.com and Quarterly Report on Form 10-Q
for the period ended September 30, 2013, filed with the Securities and
Exchange Commission.
This press release contains certain statements that may include
"forward-looking statements" within the meanings of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements, other than statements of historical facts, included herein are
"forward-looking statements." Included among "forward-looking statements" are,
among other things, (i) statements regarding Cheniere Partners' business
strategy, plans and objectives, including the construction and operation of
liquefaction facilities, (ii) statements regarding our expectations regarding
regulatory authorizations and approvals, (iii) statements expressing beliefs
and expectations regarding the development of Cheniere Partners' LNG terminal
and liquefaction business, (iv) statements regarding the business operations
and prospects of third parties, (v) statements regarding potential financing
arrangements, and (vi) statements regarding future discussions and entry into
contracts. Although Cheniere Partners believes that the expectations reflected
in these forward-looking statements are reasonable, they do involve
assumptions, risks and uncertainties, and these expectations may prove to be
incorrect. Cheniere Partners' actual results could differ materially from
those anticipated in these forward-looking statements as a result of a variety
of factors, including those discussed in Cheniere Partners' periodic reports
that are filed with and available from the Securities and Exchange Commission.
You should not place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Other than as required under
the securities laws, Cheniere Partners does not assume a duty to update these
forward-looking statements.
(Financial Table Follows)
Cheniere Energy Partners, L.P.
Selected Financial Information
(in thousands, except per unit data) ^(1)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Revenues
Revenues $ 66,646 $ 62,429 $ 199,052 $ 190,160
Revenues—affiliate 800 3,929 2,140 6,973
Total revenues 67,446 66,358 201,192 197,133
Expenses
Operating and 23,553 6,395 52,751 20,063
maintenance expense
Operating and
maintenance 6,314 7,711 23,534 14,486
expense—affiliate
Depreciation expense 14,491 14,489 43,150 43,135
Development expense 1,355 4,229 8,157 35,369
Development 133 102 1,195 2,365
expense—affiliate
General and 2,718 4,737 8,521 9,235
administrative expense
General and
administrative 42,239 36,871 101,998 48,745
expense—affiliate
Total expenses 90,803 74,534 239,306 173,398
Income (loss) from (23,357) (8,176) (38,114) 23,735
operations
Other income (expense)
Interest expense, net (52,528) (43,626) (134,806) (130,554)
Loss on early — — (80,510) —
extinguishment of debt
Derivative gain (loss), (22,335) 287 55,706 (288)
net
Other 111 145 873 289
Total other expense (74,752) (43,194) (158,737) (130,553)
Net loss $ (98,109) $ (51,370) $ (196,851) $ (106,818)
Basic and diluted net
income (loss) per common $ (0.20) $ 0.04 $ (0.01) $ 0.36
unit
Weighted average number
of common units
outstanding used for 57,079 31,997 53,277 31,449
basic and diluted net
income per common unit
calculation
September 30, 2013 December 31, 2012
Cash and cash equivalents $ 339,895 $ 419,292
Restricted cash and cash 210,076 92,519
equivalents
LNG inventory 14,158 2,625
Other current assets ^(2) 59,090 18,687
Non-current restricted 828,360 272,425
cash and cash equivalents
Property, plant and 5,642,872 3,219,592
equipment, net
Debt issuance costs, net 340,856 220,949
Non-current derivative 64,309 —
assets
Other assets 71,102 19,698
Total assets $ 7,570,718 $ 4,265,787
Current liabilities ^(2) $ 233,878 155,836
Long-term debt, net of 5,574,195 2,167,113
discount
Deferred revenue, 35,673 36,220
including affiliate
Long-term derivative — 26,424
liability
Other liabilities ^(2) 1,209 216
Total partners' capital 1,725,763 1,879,978
Total liabilities and $ 7,570,718 $ 4,265,787
partners' capital
_____________
(1) Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on
Form 10-Q for the period ended September 30, 2013, filed with the Securities
and Exchange Commission.
(2) Amounts include transactions between Cheniere Energy Partners, L.P. and
Cheniere Energy, Inc. or subsidiaries of Cheniere Energy, Inc.
SOURCE Cheniere Energy Partners, L.P.
Website: http://www.cheniere.com
Contact: Investors: Christina Burke: 713-375-5104, Nancy Bui: 713-375-5280,
Media: Diane Haggard: 713-375-5259